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September 18, 2017

Responding to Insurtech Claims, Pt. 2

Summary:

Insurtechs tell you: An application will only take a few seconds! That's nonsense. A handful of questions don't provide enough information.

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Last week, we started a conversation about some of the common insurtech claims. Last week, we mentioned the statement from one particular company about all the good that they do. If you missed last week’s post, here’s a link to A Response to Some Insurtech Claims.

Let’s get into statement #2.

Statement #2: It’ll just take a few seconds!

Swyfft wants us to believe that it only takes an address to get a solid quote on a homeowners’ policy. Going to the website, you’ll find only a few lines of text and a place to enter your address, press the button and “Get Quote.”

Implication: Your insurance company is wasting your time by asking you all of those questions. We’ll give you insurance. All you have to do is give us your address; we’ll search publicly available information and give you a quote instantly. We don’t want to waste your time.

Response: I don’t buy this. I tried this website out, too. It was pretty simple to get a quote. I put the address in and then they asked a few more questions. Then they asked a few more questions. Then they gave me a quote. It was a pretty good quote as far as insurance quotes go.

See also: What Incumbents Can Teach Insurtechs  

The problem is the lack of honesty when they say that they’ll give you a quote with just an address, or the auto insurance company that says that they’ll give you a quote without any personal information. That’s just nonsense. Their system is not making underwriting decisions based only on what their data collection algorithms can gather from the internet. Even when they say that they can give you a quote with minimal information, it’s at best a preliminary quote. It’s not a full quote. That’s when they turn around and become those they cry out against. That’s when they start asking other questions, just like I would if I was the underwriter.

Here’s my next concern and its a question for the carrier. When the customer has a loss, will they have a person review the file and try to underwrite the risk at the time of the loss to avoid paying on the claim? This is a tactic that other companies have used to their detriment. Let me be clear. If a company is going to have a person underwrite the risk, it must be done prior to accepting the risk, or early in the life of the risk. This includes underwriting upon renewal. Underwriting is the end result of risk analysis and data validation and must never be done as a means of rejecting claims as part of the claims process. If a company trusted their software to make the decision to write the risk, they should stand by that trust at the time of the claim

My final concern here is that the applicant doesn’t necessarily understand what they’re buying or rejecting. The company is making offers of coverage, including changing coverage A for their home, which an experienced insurance professional might look at and provide advice about. Without that advice, the customer might look at the options and reject them, leaving them open to retain certain losses that they shouldn’t. Those are the losses that they’ll try and file as claims later and the company will reject the claims.

See also: 3 Misconceptions on Insurtech  

I will honestly admit that some of this is my conjecture. I’m making guesses about problems that may pop up for the customer if they choose this particular sort of insurance company. I may be wrong, but I’d rather make my concerns known and be wrong than be right and keep silent.

Next week, we’ll talk about statement #3: You’ll save so much money!

This article first appeared at www.insurancejournal.com.

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About the Author

Patrick Wraight is the director of Insurance Journal’s Academy of Insurance. His goal is to help the industry to see the Academy the way he sees it: as a valued partner in the training and development of insurance professionals.

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